updated on:dec 11,2013
q1: what is continuous trading?
a1: continuous trading refers to the trading in the trading hours set by the exchange apart from the 9:00am-11:30am and 1:30pm-3:00pm periods.
q2: what is the significance for shanghai futures exchange to introduce continuous trading?
a2: firstly, it benefits the real economy. the introduction of continuous trading rules accommodates the needs of real enterprises in the pricing and risk management of futures, especially those products whose spot pricing is in the non-trading hours of shfe. since the futures market is supposed to provide risk management tools for the spot market, it should extend its existing trading hours to cover the pricing periods of the spot market, so that it could better serve the real economy.
secondly, the current market conditions are favorable. after years of exploration and development, the futures market is now growing steadily and its regulatory system is improving constantly. it is now fundamentally regulated by law and run by rules. all this has built a solid basis for the introduction of continuous trading.
thirdly, it enhances the authority of domestic prices. notwithstanding the rapid development of the domestic market in recent years, it still lags behind those of the developed countries. the extension of trading hours, however, will diversify the trading modes in the domestic market while prolonging the trading periods of listed products will result in a closer co-movement with overseas markets and improve the price continuity.
fourthly, it optimizes the participant structure in the domestic futures market. the extended hours will provide more sufficient trading time to hedge trading risks and attract domestic foreign market investors back to the domestic market.
fifthly, it gives play to the functions of the futures market. extending trading hours satisfies the need of the market to speed up its internationalizing process. it enables the market to learn from international experiences, deepen its reform, boost its openness and thus serve the national economic development at an even higher level.
sixthly, the market investors respond positively. shfe has asked and collected the advice and suggestion of market participants through informal discussion meetings and questionnaires. most members and clients approve of increasing trading hours, and express their hopes that the exchange tries out continuous trading rules on the futures products which interact closely with the international market and which help hedge spot market risks, and that the trading periods should cover major trading hours of the international market to the greatest possible extent.